Statement of Income Terminology

question 105

Essay

Statement of income terminology
The statement of income/earnings has many names. Distinguish among the income statement, statement of profit or loss and statement of comprehensive income, and the statement of financial performance.

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Definitions:

Straight-Line Method

A method of calculating depreciation of an asset by evenly spreading its cost over the expected useful life.

Semiannual

Occurring twice a year; a rephrasing of Semiannual Interest focusing on the period rather than the transaction.

Interest Expense

The cost incurred by an entity for borrowed funds, which can be a bank loan, bond, mortgage, or other forms of debt financing.

Discounted Bond

A bond sold for less than its face value due to prevailing interest rates being higher than the bond's coupon rate.